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how to calculate simple interest compounded monthly. The value of the investment after 10 years can be calculated as follows. Compound interest is the total amount of interest earned over a period of time taking into account both the interest on the money you invest this is called simple interest and the interest earned or charged on the interest youve previously earned.
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A the future value of the investment. Create an Excel document to compute compound interest. I The interest rate.
For example if the amount owed is 1500 the payment due date is April 1 the agency does not pay until June 15 and the applicable interest rate is 6 interest.
R is the the annual interest rate in decimal. R the interest rate decimal n the number of times that interest is compounded per period. The first part of the equation calculates compounded monthly interest. Monthly compounding is calculated by principal amount multiplied by one plus rate of interest divided by a number of periods whole raise to the power of the number of periods and that whole is subtracted from the principal amount which gives the interest amount.
